Apple Quarterly Financial Results

From Apple:

CUPERTINO, California—October 18, 2010—Apple® today announced financial results for its fiscal 2010 fourth quarter ended September 25, 2010. The Company posted record revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share. These results compare to revenue of $12.21 billion and net quarterly profit of $2.53 billion, or $2.77 per diluted share, in the year-ago quarter. Gross margin was 36.9 percent compared to 41.8 percent in the year-ago quarter. International sales accounted for 57 percent of the quarter’s revenue.

Apple sold 3.89 million Macs during the quarter, a 27 percent unit increase over the year-ago quarter. The Company sold 14.1 million iPhones in the quarter, representing 91 percent unit growth over the year-ago quarter. Apple sold 9.05 million iPods during the quarter, representing an 11 percent unit decline from the year-ago quarter. The Company also sold 4.19 million iPads during the quarter.

“We are blown away to report over $20 billion in revenue and over $4 billion in after-tax earnings—both all-time records for Apple,” said Steve Jobs, Apple’s CEO. “iPhone sales of 14.1 million were up 91 percent year-over-year, handily beating the 12.1 million phones RIM sold in their most recent quarter. We still have a few surprises left for the remainder of this calendar year.”

“We’re thrilled with the performance and strength of our business, generating almost $5.7 billion in cash flow from operations during the quarter,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the first fiscal quarter of 2011, we expect revenue of about $23 billion and we expect diluted earnings per share of about $4.80.”

Apple will provide live streaming of its Q4 2010 financial results conference call beginning at 2:00 p.m. PDT on October 18, 2010 at This webcast will also be available for replay for approximately two weeks thereafter.

You don’t need to look any further than Apple’s stock price over the past several months to know that they’re on a roll. A year ago, the stock price was at about $190 a share. Today, it closed at $317.93 a share — an all-time high. In fact, they’ve hit several all-time highs this month alone. Their market cap is quickly approach $300 billion. And now the company has just announced their Q4 earnings. And once again — boom.

Just as with last quarter, Apple easily beat the earnings estimates. The company posted $20.34 billion in revenue and $4.31 billion in profit — both new records for Apple. EPS was $4.64 (Wall Street consensus had been $4.06 and Apple’s guidance had been $3.44). A year ago, Apple posted revenue of $12.21 billion with a profit of $2.53 billion ($2.77 EPS). All that said, gross margin did drop a bit, to 36.9 percent down from 41.8 percent a year ago.

The key product numbers: 3.89 million Macs during the quarter, 14.1 million iPhones, 9.05 million iPods, and 4.19 million iPads. Aside from iPods, each of those is a new record for the company. The number of iPhones sold is probably the most amazing stat there.

On the conference call, Steve Jobs was bragging about the iPhone and commenting about the tablet market:

"We've now passed RIM, and I don't see them catching up with us." They must now leave their comfort zone, and will be a challenge for them to get developers to embrace their platform. What about Google? Activating 200,000 Android devices per day, and 90,000 apps in App store. Apple activated about 275,000 iOS devices per day over past 30 days, with peak around 300,0000 on some of those days. With 300,000 apps on App Store. No solid data for Android phone shipments. Google loves to characterize Android as open, and iOS and iPhone as closed. We find this a bit disingenuous. First thing most of us think as open is Windows. Unlike Windows, where most PCs have same UI and run the same apps, Android is fragmented. Many Android OEMs install proprietary UIs."

"Tweetdeck contends that it has to deal with over 100 versions of Android, and over 200 handsets. Makes this much more complicated. And this is for handsets that have been shipped less than 12 months ago. Compare this with iPhone, with 2 versions to test against. Amazon, Verizon, and Vodafone have all created their own app stores. "This is going to be a mess for both users and developers."

"Open doesn't always win. Look at PlaysForSure Microsoft music system. Even Microsoft dumped this in favor of Apple's approach, screwing OEMs. And Google's integrated Nexus One flopped. Open versus closed is a smokescreen. What matters more is what's best for the customers. Users want devices to "just work" and believe integrated will trump fragmented every time."

"I'd like to comment on avalanche of tablets poised to enter the market. It appears to be just a handful of credible entrants, not an avalanche. Nearly all use 7-inch screen. One thinks this would offer 70% of benefits of 10-inch screen. But it's only 45% as large as the iPhone's 10-inch screen. If you cut iPad screen in half, that's what you're looking at. Not enough for good tablet apps. You'd also need to include sandpaper so people could make their fingers smaller."

"Even Google is telling tablet companies to wait for new release of Android next year. What does it mean when software supplier says not to use software for tablets, and you ignore them and use it anyway? New tablets won't have any apps. And competitors having a hard time coming close to pricing, even with cheaper, smaller screens. These new tablets will be DOA: Dead on arrival. Sounds like lots of fun ahead."

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